"countdown with keith olbermann" starts right now. which of these stories will you be talking about tomorrow? the great republican small business scam. small business is a brand name. the shocking truth about which businesses are called small businesses and why. the "chicago tribune," a "small business." bechtel, small business. a "countdown" special report, small in name only. with pulitzer prize-winning journalist david cay johnston and chris hayes. and the story of the route to the truth. via lawsuits and this rare slip of honesty. >> when you start to look at who's going to be taxed, about half of all small business income will be taxed under the president's proposal. old man yells at cloud. john mccain loses it when confronted by the fact that the military has investigated gay personnel, despite the supposed

protections of don't ask, don't tell. >> i know the military very well. and i know what's being done. and what is being done is that they are not seeking out people who are gay. and i don't care what you say. i know it's a fact. worsts. liz cheney criticizes the quote attributed to the president about absorbing a terrorist attack, even though her father and his president were responsible for us having to absorb the last one. as christine o'donnell finds the gold mine, on the same subject, sharron angle has a big mouth. >> when i said it on sean hannity's television show, we made $40,000 before we even got out of the studio in new york. >> the revelation that fox news is one giant fund-raising and publicity gift in kind to the republican party. i know, you're shocked. >> i'm shocked, shocked to find that gambling is going on in here. >> your winnings, sir. all the news and commentary

now on "countdown." >> i had some business in new york today, so thank you for having me on. good evening from new york. with the final session of congress before election day coming down to the wire now, democrats are still torn between whether to force republicans to vote now in defense of tax cuts for the rich or to duck a vote on extending the bush tax cuts and let republicans campaign against them for letting all taxes rise. if it seems like a no-brainer, our fifth story tonight should remove all doubt. a "countdown" special report, the reality behind the republican argument made by house republican leader john boehner and others that tax cuts for the rich are simply tax cuts for small businesses whose owners report their business earnings on their individual personal income tax returns. house democrats have pushed back that some of those supposedly small businesses are actually big businesses, and after the white house identified the right-wing billionaire koch brothers as being among those ranks, bill kristol's right-wing magazine, "the weekly standard,"

fired back, suggesting the white house had improperly looked at the koch brother's tax return. in fact, their tax status was already public information. but as "countdown" discovered with the help of david cay johnston, who joins us presently, the koch brothers are just the tip of a half trillion dollar iceberg. a variety of sources including court documents confirm that when republicans talk about the small businesses they're trying to help with their tax cut, they're actually talking about some of the biggest companies in the world and some of the richest people in this country. mr. boehner admitting this summer that his tax cuts only benefit 3% of so-called small businesses. so how small can that top 3% be when it accounts for half of all small business income? >> only 3% of those small businesspeople, you keep talking about all the small businesspeople that are going to get taxed. only 3% would be affected by

that. do you quarrel with that figure? is that a right figure or a wrong figure? >> it may be 3%, but it's half of small business income, because, obviously, the top 3% have half of the gross income for those companies that we would term small businesses. >> so how do they decide which companies they would term "small businesses"? h&r block told politico it has $1.5 million small business clients. but extending the tax cuts would benefit fewer than 1% of them. fewer than 750,000 people, one quarter of 1% of the country, would be affected by the top rate. so how small can this top 3% of small businesses be if they make half the small business money? >> and let's remember the context back then. >> dave kamp knows. he's the ranking republican member on the house ways and

means committee. to him, the definition of small business is a footnote. literally. "according to the joint committee on taxation, 94% of all u.s. businesses in 2007 were "s" corporations, partnerships, or sole proprietorships. pass-through business types commonly used by small businesses." they call them pass-through companies because they file no taxes, passing through profits to the owners who report them on their individual tax returns instead. in short, they are considered small, not because they have a small payroll, but because they have a small number of owners. it's not the income that's small, it's not the number of employees that's small, it's just the total number of owners that's small. in the case of "s" corps, up to 100 owners. >> my colleagues and i -- >> when politicians talk about small businesses, they are including any company that pays

taxes as a pass-through. house democrats last week identified three limited partnerships that file as pass-throughs. a pipeline company called enterprise, the wall street firm, kohlberg, kravitz, and roberts, and the accounting firm pricewaterhousecoopers. the koch brothers own website lists partnership after partnership after partnership that make up a small business empire of 70,000 employees. according to the "washington post," more than 1 million people who reported at least $200,000 in income in 2008 were partnerships and "s" corps. the richer you are, the more likely you are to call yourself a small business that way. 89% of americans who make more than $10 million a year filed as a partnership or an "s" corp. in 2008, more than 500,000 of these supposed small businesses had more than $1 million in assets.

in 2005, almost 20,000 of them had annual receipts of more than $50 million. but if you want to know which companies these are, you are out of luck. because individual tax filings are not public record. still, some have revealed themselves. the "s" corp. association lobbying group is chaired by an executive of the hillman company, a small business founded by a billionaire. the "s" corp. group president is from venn strategies, a small business whose chief operating officer is a former special assistant to president bush, whose president used to work for senate leader reid. directors of the "s" corp. group come from ferrellgas, which provides propane and propane accessories, with a small business touch to 1 million customers. a small business. coorstek, north america's largest maker of technical ceramics, a small business founded by adolf coors. a small business.

the dead river company, a small business with 1,200 employees, with commercial real estate valued at $300 million. a small business. and a small business called mcelhaney, selling their tabasco brand pepper sauce out of their kitchen, to 160 countries. a small business. "the boston globe" revealed in 2007 that fidelity investments was becoming an "s" corp., a move that saved this small business hundreds of millions of dollars. similar to how a scrappy little newspaper called "the tribune," as in the "chicago tribune," made an extra $1.9 billion by converting to "s" corp. status in 2008. as tax reporter david cay johnston figured out, other companies get revealed as "s" corps when their filings become evidence in tax trials. that's how he identified one of the biggest small businesses in

the world -- bechtel. a small business that builds airports, sea ports, railroads, oil refineries, nuclear power plants. but back when it was just ye old bechtel shoppe, they built the hoover dam. today, the world's number one engineering and construction firm, a small business. companies aside, who are the actual people who would benefit from the republican tax cut for the richest small businesses? him, for one. bloomberg news reports the president and other big authors and actors and celebrities, even hedge fund managers, file as "s" corps to save on taxes. nor is mr. obama the only famous "s" corp. owner. recognize this guy? how about now? thanks to court documents reviewed by "countdown," we know one of texas' two richest men in the 1990s became an "s" corp. back in 1991.

senator john mccain knows about "s" corps. >> small businesses are the job generator of america. >> mrs. john mccain filed as an "s" corp. back in 2006. a small business owner who owns a massive beer distributorship and reported income of more than $6 million. and then there's small business man philip anschutz. a small businessman who gave $30,000 to the senate republican campaign committee last year, and $15,000 to the house. on top of his family's more than $500 million to republicans over all. he owns at least a part if not more than 100 small businesses, small railroads, small oil companies, small sports stadiums, small arenas, a small national movie theater chain, a small half of small major league small soccer, the l.a. kings, the l.a. lakers. his small business entertainment company likes to clean out the

old garage now and again to put on small shows by bette midler and cher. mr. anschutz even owns small newspapers, including "the weekly standard." "countdown" has even identified one "s" corp. owner whose reclusive founder and chairman actually works out of these very nbc headquarters in new york. hi. technically, i'm a small business. as promised, let's bring in pulitzer prize-winning reporter david cay johnston, the author of "free lunch." he's also a columnist for tax notes. david, thanks for your time. >> thank you, keith. >> first of all, did we explain what's going on correctly and can you flesh it out a little bit for us? >> everything you said was correct and it's actually much worse than this, because in addition to being pass-throughs -- in addition to being pass-throughs, many of these enterprises benefit from all sorts of tax rules that

allow them to take money now and then pay their taxes 10 or 20 years in the future. that's an enormous benefit and a subsidy that ordinary working people who have their taxes taken out of their paycheck before they get it are, in effect, financing for these businesses. in addition, about 900 of these small corporations, it looks like from the statistics, paid no income taxes, even at the personal level of the owner. >> when we think about small businesses colloquially, we think of small mom and pop hardware stores. some company running out of someone's home. some employee breaks out on his own. are any of those kind of businesses in the range that republicans are trying to protect in their supposed so-called benefits for supposed so-called small businesses? >> well, keith, yes, there are some. you can have an author. maybe my next book, i can make

enough money to come on your program for it. there are people who may own a chain of fast food stores or a particularly successful group of liquor stores. but they're a small proportion of this. there are about 15,000 "s" corps have an average revenue of $18 million, and partnerships that have an average income of $137 million. >> these rich guys paying the top rates, they'd have to pay a lot more in taxes if the democrats don't renew the bush taxes, right? >> well, yes and no. they do, after all, have access to tax shelters. there are all sorts of fine rules. the reason the tax code is so thick has nothing to do with ordinary americans, it has to do with favors bought with campaign donations. but, yes, overall they will pay higher taxes, which will go to provide better infrastructure, so they can move their goods and services, educate people so they have people to buy their products, et cetera.

>> just putting aside for a second the orwellian quality of this whole thing, that peace is war and big business is small business, in terms of hiring, regardless of the size of business, the gop argument is that raising taxes would curtail new jobs, would curtail hiring. is that really the biggest factor, or don't businesses wind up deducting those costs in any case from their own taxes and their own expenses? >> well, economic theory says there should be less job creation when we raise taxes. well, bill clinton had congress raise taxes in 1993 and eight years later they were cut, and again ten years later, under president bush. during bush's eight years, 3.5 million jobs were created. during clinton's years, six times as many, 21 million jobs. in fact, during the clinton years, more jobs were created in those eight years than in the 20 years of ronald reagan and both bushes in the white house. so i think you have a tough time making that argument.

what matters is what the taxes are spent on. >> last question. is there law or code somewhere that defines what a small business is? is that -- is there actually a -- just a semantical violation here? or is there something more? >> no, this is essentially semantical. the sba says if you have fewer than 500 employees, you are a small business. many of the companies we've talked about are not small businesses. and remember that small businesses also destroy many jobs. it's a relatively handful of little companies that go on to become big companies. the gazelles, they're known as. like, say, fedex, that went from nowhere to being a big company very quickly. >> david cay johnston, thanks for your time tonight and for your help on all this. >> glad to be here. here's another shock, the billionaires who benefit from being small businesses, trademark, use their money to fund republican causes, like tax

cuts for small businesses trademark, like them. it's not just those small businessmen, the koch brothers. another small business man we mentioned is funding pennsylvania republicans. and one we haven't even told you about yet is funneling his tax savings to karl rove. we continue with this, next. today just seemed like a great day to save. oh, it's not just today. with our free loyalty program, you earn great stuff like accident forgiveness and bigger discounts just by staying with us. oh! ooh! so, what you're saying is, it gets even better with age. oh! tell me we're still talking about insurance. rewarding loyalty. now, that's progressive. call or click today.

we've already shown you how the koch brothers by quasi legal definition owns a peck of small businesses. next, how they and other small businesses are in turn funneling campaign funds back to republicans. she admits what we all know, but fox doesn't want anyone to confirm. their supposed news network constitutes a fund-raising arm of the republican party. also tonight, he loses it over don't ask, don't tell. the video you must see to believe. and this georgia senator tonight confirms an anonymous homophobic slur posted on an lgbt website came from inside his senatorial offices. continuing our not so small small business report with chris hayes, next.

salon.com reported this week that 91% of the money for karl rove's new attack ad group comes from billionaires, three billionaires. and in our fourth story tonight, continuing our special report about how the term "small business" is an utter misnomer, the "chicago tribune" is technically a small business, as is the world's largest construction concern, bechtel. "countdown" has learned one of those rove funding billionaires is -- you guessed it -- carl lindner, who gave rove $400,000 last month. and who made his $1.7 million fortune through united dairy farmers, a small business, with 100 stores.

number 582 on forbes' list of the world's billionaires. not that much below henry hillman, whose family bankrolls pennsylvania republicans with proceeds from his small investment business, which forbes says makes him worth more than $2 billion. let's turn now to msnbc contributor, chris hayes, the washington editor of "the nation" magazine. chris, good evening. >> good evening, keith. >> how does the tax cut debate change now that we know what the republicans mean by small business and to what degree the public has been had? >> well, you hope the democrats hammer on this. what's interesting is that even before this, even given the messaging the republicans were doing in this completely disingenuous small business chicanery that you revealed, it was still -- they were still on the wrong side of public opinion. the fact of the matter is, people understand the number 250,000, right? they understand that we are talking about a group of people that's very -- that's quite small and doing quite well.

and when you climb up the income scale, i mean, you start getting up to incomes, who are hedge fund people that are making $1 billion in a year. that's a flow. that's not wealth. that's annual income. people understand that. so they were already -- public opinion was already on the side of progressives on this. the real question is whether the democrats are going to politically force the issue. i mean, i think something like this can get rid whatever last vestiges of resistance there are, but it also exposes the political economy of the way this works and the way that upward redistribution has been sold. not just in this election cycle, but for the last 30 and 40 years. >> incidentally, thank you, chris, for providing those home movies of your yacht and your champaign. greg sargent at plum line reported that the speaker, nancy pelosi, is getting pressure still from the conserve-crats, the conservative democrats, who say that holding on to the vote is going to make them vulnerable on election day, and many are pushing to include these tax cuts for the rich as well.

how much crazier does that plan now look, now that we know who they'd be helping out by using that plan? >> it is so politically, morally logically bankrupt that it beggars belief. i wrote a feature for the nation magazine last year, and i talked about the blue dogs and the big hustle. the blue dogs have is the big hustle. that's our big thing. we're united around one thing, which is deficits. that is the way that they trump themselves. that's their identity as a caucus. and what they are doing here now is to say, we want you to add $700 billion to the deficit over the next ten years, and then much more in perpetuity, right? because we're not talking about sunsetting any of this. this is out into the future as far as the eye can see. that's what they're taking a stand on. so it should never be reported -- no one should ever say, never let it be said about the blue dogs that they care about the deficit. they do not care about the

deficit. what they care about is representing the interests of wealthy people that give them lots of money, or some -- you know, or themselves. i don't know. i'm not going to impute to them what their motives are, but what is clear is that they don't care about deficits. >> we have a draft of this gop plan that the party -- the unsigned one that the party is officially revealing tomorrow. it calls for making the bush tax cuts permanent for everybody, including the entrepreneurs and the family-owned small businesses on which we depend to create jobs. how does that play, now that we know the families owning these small businesses are worth billions? >> not only are they worth billions, but they are funding this entire enterprise. i mean, that is the thing that is so insidious about what we see. i mean, this is part of a larger phenomenon in the american political economy. there's a book that talks about the way that we've seen this massive rise in inequality over the last 30 years, on the front end, before taxes are paid, and then what our government has done, it's come in and

exacerbated that inequality by cutting taxes for the wealthy. and we've seen it chipped away -- even when we're talking about democrats, we're not talking about a tremendous amount of redistribution that's even on the table, right? this is really at the upper end, and there's already things like the carried interest loophole that allows hedge fund people to pay 15%. that's not even on the table. so we're barely even getting at this issue, and the kind of small business story has been one of the most powerful stories that conservatives and the wealthy have used to continue to enrich themselves, despite the trends in the economy. >> this nice little snake eats its own tail loop, the republican pushes for breaks for small businesses, small businesses that are so classified only because of the number of their owners, and then the giant small businesses feed campaign contributions back to republicans. >> exactly. >> close the loop. we already know about the koch brothers. but now we're seeing a picture of one rich right-wing family after another funding the gop so the gop can run on tax cuts that will benefit one rich, right-wing family after another, is that about it?

>> yeah. we're seeing something that -- i don't want to use the word pooch or plutocratic pooch to describe this, because all this is in the confines of non-violent democratic activism, but we are seeing a power play by the nation's plutocrats. this is just tip of the iceberg. democrats said we're getting killed right now by money that's flowing in. >> msnbc contributor chris hayes, thanks for helping us flesh this out tonight, chris. >> thank you, keith. though a victim of it testified under oath to his committee in march, john mccain not only denies the military has ever investigated one of its own to see if he was gay and then kicked him out when he was, but he erupts at a reporter who tells him the truth. and the office of a georgia senator now confirming tonight somebody there indeed posted a homophobic slur on an internet site.

don't ask, don't tell becomes don't ask, don't tell john mccain because he knows everything, sonny, and don't you forget it. first, the sanity break and the tweet of the day. a hash tag game broke out last night. baseball novels, you know, the heart is a tory hunter, chris spier, 1994, charlie manual and the chocolate factory. but the winner from mr. kristen childress. the old man and the cc sabathia. i also like the utley american and the brothers kusmanoff. let's play "oddball."

we begin at a dog park in cambridge, massachusetts, where dogs not only come to play but also to provide energy. their, uh, leavings are the sole source of power for the lamp in the park. the energy creation process very simple. you pick up your dog's business in one of the provided biodegradable bags, throw it in the tank provided for the purpose, give the wheel a quick turn and let science do the rest. science! most people are very excited about the possibilities of renewable source of energy, or you can take the view of comedian louis anderson. what, did we lose a war or something? and to waterloo, iowa, jim demint's favorite city, where we find monkeys sitting on dogs. these are not your regular dog-riding monkeys, these are racing dog monkeys. and they're off! abu pulls ahead on the outside, but curious george is investigating the inside route and down the stretch they come, and abu entering a whole new world of victory. no animals were harmed in the making of the video.

monkey! and time marches on. an anti-gay online slur mainlined right back to the office of republican senator from georgia. it has now been confirmed to be the point of origination. and john mccain's famed temper returns along with his exclusive ownership of facts. don't ask, don't tell him that he's wrong, next.it'll to insure you. nationwide insurance, we need a freeze-frame here. let's give parents a break, right ? let the discounts they've earned be passed down to their teens. save mom and dad up to 25% versus the competition. we'll call it the nationwide family plan. here you go, and there you go. unfreeze ! keys ! savings ! ♪ nationwide is on your side ♪ road trip !

two new aspects tonight in the debate over don't ask, don't tell. john mccain has gone over loose cannon over it. but in our third story, breaking news from the office of republican senator, saxby chambliss of georgia. confirmation that a gay slur posted on a website following yesterday's senate vote originated from that office. chambliss's office claiming responsibility for the comment. the comment came from someone notifying himself as jimmy. bloggers quickly noted jimmy had a senate ip address. according to the atlanta journal constitution, chambliss' office has not determined exactly who's behind the slur.

it's turned the matter over to the senate sergeant at arms. meanwhile, senator john mccain is claiming the military has never actively sought to dismiss any gay personnel since don't ask, don't tell was implemented, even though there are more than 1,000 documented cases. and one such case, testified in front of senator mccain. mccain alongside lindsey graham answered questions from reporters. among them, kerry eleveld of the advocate and chris geithner. >> they did not go out and seek -- regulations are, we do not go out and seek to find someone's sexual orientation -- >> but senator, that's not the facts. >> we do not. that is the fact. that is the fact. i know the military very well, and i know what's being done. and what's being done is, they are not seeking out people who are gay. and i don't care what you say. i know it's a fact. >> it's not what i'm saying. >> i don't care what you say and i don't care what others say. i've seen it in action. i've seen it in action. i have sons in the military. i know the military very well. so they are not telling you the truth.

>> but senator, just to make sure -- >> just to make sure, we do not go out and seek out -- >> private e-mails -- >> no one goes out to see whether someone is -- >> private e-mails, sir. private e-mails are not being searched? >> -- whether someone is gay or not. we do not go out and see if somebody is gay or not. i know they don't go out -- they do not. they do not. they do not. you can say that they are. but it's not true. >> that is the case of mike almy, senator. >> bring them to our office. it is not the policy. it is not the policy. >> but it is the case that it's happening, senator. >> it's not the policy. it's not the policy. it's not the policy. it's not the policy. you can say that it is the policy, if you choose to. it's not the policy. i would be glad to get that to you in writing. >> major mike almy, a 13-year veteran of air force service was discharged following the very thing mccain claims to not be happening in the military. here is his testimony in front

of the senate armed services committee back in march to senator mccain. >> the commander in iraq, during the height of the insurgency, ordered a search of my personal e-mails solely to determine if i had violated don't ask, don't tell and to gather whatever evidence could be used against me. even as my commander was relieving me of my duties, he assured me that this was in no way a reflection on my performance or my abilities as an officer. >> time to call in syndicated columnist and author of "the commitment: love, sex, marriage and my family," dan savage. thank you for your time. >> thank you, keith. >> mccain's apoplexy in a moment. but this comes on a day when chambliss saxby voted to keep patriotic americans from fighting from their company and this homophobic comment was posted out of his office. whoever wrote it, it came from that office. do you expect to see outrage from the right about this? >> certainly not outrage from the right. i would hope you would see outrage from the right, but this is par for the course. this is what they believe.

this is how they talk about us in private, when they think no one's looking and they think no one's tech savvy enough to trace their hatred back to their office. but it's no surprise. saxby chambliss is a homophobe, and this is how they talk about gay and lesbian americans who are serving in the military, when they think no one in the room but them is listening. >> let me ask the devil's advocate's question. he's the one who approved a slanderous campaign against a double amputee. a senate office is a big place with a lot of computers. can you actually assign responsibility for this to senator chambliss? >> not to senator chambliss, but to the company he keeps. and senator chambliss, we know to be a homophobe from his voting record. we don't have to peer into his mind. we have seen the evidence of his homophobia and his hatred and his bigotry in his votes, and particularly in his vote this week to keep gay and lesbian americans out of the military. >> well, at least they're all

smart in the office, smart enough not to realize you could trace an ip address. let me ask you about senator mccain. last night major almy was on rachel maddow's show and he said he was dumbfounded, was his word by the mccain remarks. what's your reaction to him? >> that his outburst had everything but "get off my lawn." props to kerry eleveld for committing an act of journalism and challenging mccain. he's not entitled to his own facts. some of us are old enough to remember when senator mccain condemned agents of intolerance on the left and the right. and it is saturday and tragic and pathetic to see that he has become himself, an agent of intolerance, who hopes to get his cut on november 2nd. >> in a strange way, does it help your cause when you see a john mccain launch into full-fledged fingers in the ears, pissy old man mode when it comes to don't ask, don't tell? >> as long as he's called on it. we have a media culture in this country where politicians are allowed to assert falsehoods and then a lot of the lamestream

media, if i may borrow a phrase, not msnbc, who has trotted out the facts, won't challenge him on what he knows to be true. we know mccain was incorrect or lying or diluted or senile if i may, and he needs to be called on it and held to account. and msnbc is doing just that, and god bless msnbc. >> and somewhere, by the way, for saying lamestream media, somewhere sarah palin's ears just sort of flapped out, because she heard you say that. sharing the phrase with her. thank you very much, author and columnist, dan savage. >> thank you. you and i may have thought that fox was just a fund-raising arm of the gop, but sharron angle has now admitted and it the witch of delaware has now taken advantage of it. nice. liz cheney's arrogant unsubtle about the president for absorbing terrorism when it was her father that made absorbing terrorism unavoidable. and when rachel joins you at the top of the hour, the billionaire's fund-raising club for the republicans and the man behind it, this guy.

another tea partier with another brilliant idea to privatize something in government that actually works, va hospitals. and the danger to the gop of the loose cannons like sharron angle. occasionally they will shoot at their own side. we all know fox is a fund-raising arm of the republican party, but that doesn't mean they wanted to admit that, arr.

sharron angle makes another boo-boo. only this one confirms fox news is one big gift in kind to her senatorial campaign. that's next. but first, get out your

pitchforks and torches, coming october 26th, time for tonight's worst persons in the world. to an unidentified and overly successful bank robbery in southwest bulgaria. he got away with about $190,000 worth of bulgarian currency. although, "got away with" is probably the wrong term. it only comes in denominations as large as 100, so he had to be hauling off at least 2,800 100 notes and his getaway vehicle was a motorcycle. you've already guessed, haven't you? he got on the thing with the money in the bag and it fell over from the weight. and his accomplice's motorcycle stalled in front of the police station. our runnerup, colorado tea party candidate ken buck. after defending don't ask, don't tell by making the curious statement that we need to keep the military, quote, homogenous, he moved on to insisting for no abortions for even rape or insist. but now he may have topped himself. would-be senator buck wants to partially privatize va hospitals. "would a veterans administration

hospital that is run by the private sector be better run than by the public sector? in my view, yes." a survey in 2003 of vets that went through the va hospital consistently graded their treatment significantly better than medicare patients using their own doctors. even with the walter reid debacle, va hospitals are uniformly considered among the best in the country. and sticking to his inflexible tea party privatize-everything dogma, ken buck proposes screwing it up, just to curry a few votes from some easily led conservatives. buck did say he thinks the government should pay for privatized vets' care. they shouldn't have to pay for it themselves. but just wait, somebody will propose that too. but our winner, liz cheney. i'm just going to read this. it's self-explanatory. "americans expect our president to do everything possible to defend the nation from attack. we expect him to use every tool at his disposal to find, defeat, capture, and kill terrorists. we expect him to deter attacks by making clear to our

adversaries that an attack on the united states will carry devastating consequences. instead, president obama is reported to have said, quote, we can absorb a terrorist attack. this comment suggests an alarming fatalism on the part of president obama and his administration. once again, the president seems either unwilling or unable to do what it takes to keep this nation safe. the president owes the american people an explanation." signed liz cheney, chairman, keep america safe. madame, who in the hell do you think you're talking to? the negligence, dereliction of duty and nonfeasance of your father led directly to this country having to absorb a terrorist attack. to quote you, your father and mr. bush failed to use every tool at their disposal to find, defeat, capture, and kill terrorists and were unwilling or unable to do what it takes to keep this nation safe. your father and mr. bush, miss cheney, were utter failures whose track record on terrorism will go down in infamy, and worse still, your statements suggest that this country is not capable of absorbing the

consequences of a terrorist attack, even though it already has, because it had to, because your father and mr. bush failed to absorb the warnings screamed at you by the intelligence community. america, miss cheney, absorbed eight years of your father and george bush. we have proved we can absorb anything. and the only explanation owed to the american people, miss cheney, is by you. is the name of your group "keep america safe," is that deliberately ironic or are you in secret agreement that your father and the last president failed utterly to do that? liz cheney, chairman, today's worst person in the world.

turns out that fox news is not the communications arm of the gop -- well, not solely the communications arm of the gop. in our number one story tonight, it is also the fund-raising arm of the gop, who can pay a visit

to softball sean and raise some dough at the same time. the national news organizations leave the candidates lacking. my opinion, no, sharron angle's admission. at a house party this month, the nevada republican senatorial candidate was asked about her fund-raising efforts, miss angle explains she needs a friendly press outlet where she can make a plea for donations. and while she lauded rush limbaugh's show for this purpose, her heart belongs to foxy. the audio was provided to the "las vegas sun." >> but here's the deal. when i get a friendly press outlet, not so much the guy that's interviewing me, it's their audience that i'm trying to reach. they say, bill o'reilly, you better watch out for that guy, he's not necessarily a friendly. doesn't matter. his audience is friendly and if i can get an opportunity to say that at least once on his show, when i said it on sean hannity's television show, we made $40,000

before we even got out of the studio in new york. it was just great. >> is that from the staff? the other benefit of the go-to guy, softball sean, is getting that national audience while bypassing the national, you know, news. as catalog by talking points memo, mama grizzly was a founding member, as the vice presidential candidate, sarah palin appeared with hannity after her catastrophic interview with charles gibson on abc. and rand paul, soon after he confessed his disdain for certain parts of the civil rights act and my colleague rachel. and delaware senatorial candidate, christine o'donnell, after spurning two media outlets on the same day, went over to cable and declared that she was done with the national media. >> governor sarah palin tweeted, and i thought she gave you some interesting advice, and i want to get your take on it. christine o'donnell's strategy, time's limited. use it to connect with local voters who you will be serving versus appeasing national media seeking your destruction. >> she's absolutely right.

governor palin is right. that's a great piece of advice and that's exactly what we're doing. i had some business in new york today, so thank you for having me on, but our focus is delaware. i'm going immediately back to delaware. we've got a packed schedule tomorrow and attending a ladies' luncheon. i'm not going to do anymore national media, because this is my focus. delaware is my focus, and the local media is my focus. >> now, sean, give me my damned $40,000. a fox news source told media matters that o'donnell had canceled an appearance on fox news sunday in the broadcast arm of that operation, but appeared on hannity two days later for a reason. quoting the unnamed source, she made a choice about interviews where she thought she would get a certain kind of treatment. let's turn to the president of media matters for america, eric burns. eric, good evening. >> thank you, keith, how are you? >> i'm well, sir. let's start there. the admission from that source, as if we really needed one, that fox prime-time on cable is the place to be for conflict-free national media exposure. >> well, look, absolutely.

first of all, let me just point out, maybe it's probably a little shocking to folks that at fox, media matters, we do actually have a source inside fox news that's giving us this information, and it's really, really groundbreaking, because it's almost a tacit admission from fox what a lot of people understand in the republican tea party. and that is, when they're going on fox, especially on hannity's program, they're not going there for an interview, they're going there for an infomercial to help raise money. in that o'donnell interview with hannity last night, that was a 16-minute interview that would be worth close to $1 million in advertising expenditures would she have to pay for it like other campaigns. >> and then there's sharron angle who's confessing how great it is to use certain fox news shows as fund-raising. is she stating the obvious? or is there some value in that admission? >> she's stating the obvious for certain tea party candidates. that's why they're going on fox and not going elsewhere. because they know they can go on, raise money. and she's established that quid

pro quo very, very clearly in statements that she's made, and in the clip you showed before. i think what's really dangerous about this, keith, is when you have, you know, a supposed news network, which we know, of course, fox is not. they're a political operation. you know, providing this kind of support, fund-raising, you know, pr to an entire party of candidates -- if the tea party republicans win in november, we're going to have a congress run by john boehner, glenn beck and michele bachmann. >> well, there's one brain in there. i once said in an interview when i still worked there that espn was a monopoly, and as soon as it got printed, the espn people came to my desk and said, don't ever, ever say anything like that again. what they were saying is that the statement i made had conceivably implementations for law's legal government regulation. could what sharron angle have any kind of legal implication? there's nothing actionable about that there, is there?

>> at the federal level, it's a little more difficult, but a complaint has been filed about governor kasich's campaign, against fox, because they ran a chyron of his website on their -- you know, on the air, which they're suggesting is an illegal corporate in kind contribution to his campaign. and of course, that -- running a chyron of his website, that pales in comparison to the kind of activity we see on fox every day when it comes to these, you know, republican tea party candidates. so i think -- >> go ahead. >> i think there is certainly a possibility for legal action. in certain areas. >> some of the things that you were referring to. they execute gop talking points, they edit sound bites of the president and other democrats as if it was a madison avenue ad firm for the republican party and the fund-raising stuff. practically speaking, what needs to be done about fox? >> well, the first thing, the media's got -- the mainstream

media, real media, the journalists in this country have got to get serious about educating people on what fox is and what is not. it's not a news organization, it's a political operation. media matters is called for the white house correspondents' association to remove fox's, you know, first row seat in the white house briefing room, and former white house correspondents and association chairman ed chen you know called the move to give fox that seat a travesty. and i think the second thing is, advertisers on fox need to understand that they are using their dollars to support the election and the electioneering of these candidates by fox. >> media matters president, eric burns. thank you, eric. >> thank you. that's september 22nd, the 2,701st day since president bush declared mission accomplished in iraq, the 2,890th day since he declared mission accomplished in afghanistan, and the 168th day sie the deepwater horizon disaster in the gulf. i'm keith olbermann.